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Questions from Economics for Today by Tucker, Chapter 1

Economics for today by Tucker, 8th edition Chapter 1

Chapter 1 & 2 is Intro to economic way of thinking and production possibilities, opportunity cost and economic growth

Question 2 -Assume that a research firm collects survey sales data that reveal the relationship between the possible selling prices of hamburgers and quantities of hamburgers consumers would purchase per year at alternative prices. The report states that if the price of a hamburger is $4, 20,000 will be bought. However at a price of $3, 40,000 hamburgers will be bought. At $2, 60,000 hamburgers will be bought and at $1, 80,000 hamburgers will be purchased.

Based on this data above describe the relevant relationship between the price of the burger vs the quantity consumers are willing to purchase, using a verbal statement, a numerical table and a graph. which model do you prefer and why?

4. Which of the following decisions has the greater opportunity cost and why?
A: the decision to use an undeveloped lot in Tokyo's financial district for an apartment building
B: the decision to use a square mile in the desert for a gas station

6. Following is a set of hypothetical production possibilities for a nation.
combination Autos (thousands) Beef (thousands of tons)
a 0 10
b 2 9
c 4 7
d 6 4
e 8 0

a. Plot these production possibilities data. What is the opportunity cost of the first 2,000 automobiles produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest?

b. Label a point F inside the curve, (having trouble understanding curves in step by step) Why is this an inefficient point? Label a point G outside the curve. Why is this point unattainable? Why are points A through E all efficient points?

c. Does this production possibilities curve reflect the law of increasing opportunity costs? Explain.
D. What assumptions could be changed to shift the production possibilities curve?

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Solution Preview

Question 2:
Verbal statement: For every $1 decrease in the price of hamburgers, an additional 20,000 hamburgers are bought.
Table & Graph: See the attached file.
You can choose which model you prefer. I prefer the graph because it visually shows the relationship.

Question 4:
Choice A is correct. The opportunity cost of a decision is the value that could have been achieved by using the same resources for a different purpose. There are any number of hugely profitable uses for a lot in Tokyo's financial ...

Solution Summary

These are detailed solutions to questions 2, 4 and 6 from Chapter 1 of the textbook Economics for Today by Tucker, 8th edution. The topics covered are:

Law of demand
Opportunity cost
Production Possibilities Frontier (PPF)

The solutions are explained in detail and supported with graphs.